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How to use an unexpected windfall to create long-term prosperity

If an unexpected lump sum lands in your bank account, you might be tempted to splash out and treat yourself. However, using a windfall effectively could create long-term prosperity.

There are plenty of reasons why you might suddenly receive a cash injection. Perhaps you’ve received a bonus from work or inherited assets. Whatever the reason, before you start making plans, read on to find out how you might use it to improve your long-term financial security.

Favouring savings could mean UK adults miss out on long-term growth

A February 2025 study from Aegon asked UK adults how they’d use an unexpected £5,000 bonus. Encouragingly, 70% would prefer to save for the future or pay off existing debt than spend it on themselves.

However, many would miss out on long-term growth opportunities as they favoured holding the money in cash – 27% would deposit it in a savings account and 16% would use a Cash ISA. In contrast, just 9% would invest in stocks and shares and 5% would invest through their pension.

While cash can seem like the “safe” option, the interest rate is likely to be lower than potential investment returns. So, while intentions might be good, they could be missing out on an opportunity for long-term growth.

Investing isn’t always the right option if you’ve received a windfall but it’s important to weigh up the pros and cons. Here are six useful steps that could help you identify how to use an unexpected cash injection in a way that reflects your goals.

1. Set out your financial goals

You can’t make a decision that reflects your goals if you haven’t defined what they are.

So, before you start thinking about how to use the money, answer these questions: What are your main financial goals, and when do you want to achieve them?

Your answer can provide direction for the decisions you make next. For example, if you said you wanted “to create a nest egg to give my child in five years”, the most effective way to use the money would be different than if your answer was “to retire in 20 years”.

2. Assess your current finances

A windfall might seem separate from your day-to-day finances. Yet, taking the time to understand your current financial position and how the additional money could be used to support your existing financial plan is likely to be valuable.

For instance, the Aegon research found 12% of people would opt to pay off debt.

Paying off debt may make financial sense and have a positive effect on your overall wellbeing – many people feel relief and a sense of achievement when their mortgage is paid off.

In addition, lowering your regular outgoings might provide you with greater freedom. Perhaps you could reduce your working hours or change your role as a result.

3. Review your financial safety net

While part of your wider financial plan, it’s worth paying particular attention to your financial safety net when reviewing your current position.

You may hope to never need your emergency fund, but, should something unexpected happen, a financial safety net is invaluable.

A common rule of thumb is to have six months of expenses in an easily accessible account that you could use in an emergency, from a roof repair to needing to take time off work due to an illness. Going through your financial commitments could help you set an emergency fund target that’s right for you.

You may also want to consider financial protection. Several types of protection would pay out either a lump sum or regular income when the conditions are met. For example, income protection would normally provide you with a portion of your salary if you need to take time off work because you’re ill or injured.

4. Consider if investing is right for your goals

When you’ve received a windfall, one important decision is whether to save or invest the money.

Usually, a savings account makes sense if you’re goal is within the next five years or you might need access to the money at short notice, such as your emergency fund.

On the other hand, if you want to build long-term prosperity, investing might be the right option for you.

It’s not possible to guarantee investment returns. However, markets have, historically, delivered returns over a long-term time frame. So, if you aim to turn a windfall into wealth that could support long-term goals, investing may help you get more out of your money.

5. Add money to your pension

If you decide investing is right for you, don’t overlook your pension.

A pension provides a tax-efficient way to invest for your retirement. Tax relief provides an instant boost to your contributions, and the potential to benefit from decades of compound returns might turn an initial lump sum into a way to create a comfortable retirement.

However, you can’t usually access the money in your pension until you turn 55 (rising to 57 in 2028). So, it’s important to understand your goals and time frame before you boost your retirement pot.

6. Seek professional advice

Working with a regulated financial planner gives you a chance to really consider what you want to get out of the windfall, and how you might achieve that. As well as creating an initial blueprint, ongoing financial advice could help ensure you remain on track and that your plan is updated to reflect changes in your goals or circumstances.

Please get in touch to arrange a meeting with one of our team.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate NS&I products.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

Key financial planning challenges couples face and how we could solve them

Creating a financial plan can seem complicated, especially if you need to take into account your partner’s views, assets, and goals. At times, you might have conflicting ideas about what is “right” and it can be a difficult situation to navigate.

Working with a financial planner as a couple could help you overcome some of the key challenges you might encounter when building a financial plan with a partner.

Challenge 1: Starting money conversations

Talking about money is sometimes seen as a taboo subject. So much so that even talking to your partner about shared finances can feel awkward.

Indeed, according to a March 2024 survey from Aqua, just 24% of Brits discuss finances with their partner frequently. In fact, far more (39%) admitted they don’t talk about money with their partner regularly.

From discussing everyday spending to investing for your future, it’s important to be on the same page, and that’s impossible if you’re not talking about money.

Having a regular meeting as a couple with a financial planner gives you dedicated time to talk about money and get those important conversations started – you might find they come more naturally over time.

Challenge 2: Balancing different priorities

Even if you’re working towards the same overall goal, there might be times when you and your partner have different priorities.

Perhaps you want to put extra money into your pensions so you can retire early, but your partner would rather focus on building a nest egg for your children. Balancing these competing priorities can be challenging and lead to arguments, even though managing your finances well is important to both of you.

A financial plan that’s tailored to you can help you understand the effect of your decisions so you can balance different priorities.

For example, in the above instance, you might calculate if you could still reach your retirement goals if you delayed increasing pension contributions for five years. The outcome may mean you feel more comfortable adding contributions to your child’s savings, knowing that your long-term future is still on track.

Challenge 3: Managing conflicting money habits

Conflicting views on how to use money and spending habits are a major cause of arguments in relationships.

Indeed, an Independent report from March 2025 suggests that 30% of people in relationships are worried that discussing savings or investments will cause arguments. Working with a financial planner could minimise conflicts and ensure you’re both on the same page.

Having a shared goal could reduce conflicting spending habits. Imagine you’re in a relationship where one of you is a “spender” and the other a “saver”.

Having a defined amount that needs to be added to savings or investments each month to reach a defined goal may mean the spender is less likely to overspend. Similarly, the saver may feel more comfortable spending disposable income if they know long-term goals are on track.

Sometimes your financial planner acting as a neutral third party can be useful when you’re discussing differing money habits too. They may be able to highlight where a compromise could be made or demonstrate why one option better supports your lifestyle goals.

The good news is that when you’re working together, you could get more out of your money.

Challenge 4: Bringing together different assets

Understanding how assets may be used to reach your goals can be complicated and when you’re planning with a partner, bringing them together may be a challenge.

For example, you may both be paying into a pension – what income could each provide and is it enough to deliver the lifestyle you want? Should you have individual savings accounts or combine them?

A financial plan can help you get to grips with your assets, understand your options, and make decisions based on your goals.

Equally, many tax allowances and reliefs are individual. So, you might need to consider how to use both your ISA allowance, pension Annual Allowance and more in a way that reflects your circumstances and provides both of you with financial security.

We can work with you and your partner to create a bespoke financial plan

A plan that’s tailored to you and your partner could help both of you feel more confident about the future and ensure you are working towards goals together.

Please get in touch to talk to us about your aspirations and build a financial plan.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Why investor fear and anxiety play a role in market volatility

2025 has already been eventful for investors. Many factors are influencing market volatility, and one cause you might have overlooked is the emotions of investors. Read on to find out why fear and anxiety might lead to the value of investments falling.

US president Donald Trump entered the White House for a second term in January. Since then, his policies have caused global uncertainty, particularly the introduction of tariffs on goods imported into the US.

Indeed, Forbes reported in April 2025 that during the first 90 days of the new administration, the S&P 500 (an index of 500 leading companies) had tumbled 15% from its peak. The Nasdaq, a technology-focused index, had fallen 20%.

It’s not just US markets that have been affected. Markets around the world have experienced volatility.

While the overall trend has been a downward one, there have been points where the market has picked up.

For example, on 10 April, Trump paused his tariffs against most nations except China. The Guardian reported markets surged following the news – the S&P 500 was up 5.6% and the Nasdaq jumped more than 8% – as investors hoped there would be a renewed focus on trade deals.

So, over the last few months, investors have experienced larger swings in the value of their investments than they might usually.

It’s easy to look at the news and think that volatility is something that happens to investors. Yet, how investors react to news drives volatility, too.

Emotional investment decisions may result in market declines

At times, investor emotions, like fear and anxiety, may play a major role in market volatility.

When investors are worried, they’re more likely to react based on emotions, even if they usually make logical decisions. Listening to the news about geopolitical tensions could spark large numbers of investors to sell their assets because they’re worried the value could fall.

If enough investors panic sell, it can lead to a downturn that creates yet more uncertainty, which, in turn, might lead to the value of assets falling even further. So, sometimes, short-term market swings are due to investor fear, rather than economic data.

It’s not just negative news that might lead to investors making knee-jerk decisions either.

If the government indicated it might make an investment in Artificial Intelligence (AI), you could see technology stocks benefit from a rise due to excitement about the potential boost, even if the investment doesn’t materialise.

Data from interactive investor highlights how announcements might prompt investors to act.

On 7 April, Trump announced so-called reciprocal tariffs on many nations. This led to market volatility and a record number of people buying and selling assets through the investment platform. In fact, trading volumes were 36% higher than the former record, which was set just a week earlier during a similar period of volatility.

While some of these investors may have made decisions based on worries about the future, others might have been excited at the prospect of being able to buy when the market is low. These decisions made by individual investors will have played a small role in the volatility the market experienced.

3 quick tips for keeping your emotions in check during volatility

While investment returns cannot be guaranteed, reviewing the historical data suggests markets deliver a return over a long-term time frame. Remembering this during periods of volatility could help ease your nerves.

Here are three quick tips that might enable you to keep your emotions in check when investing.

Turn off the noise. If hearing about what’s happening in the markets puts you on edge, simply turning off the noise and not checking the performance of your investments outside of regular reviews can be hugely helpful.
Recognise that news headlines aren’t your portfolio. Headlines shouting about markets “plummeting” can be scary, but they often don’t represent what’s happening in your portfolio. Diversified investments may mean that when one area experiences a dip, gains in another balance it out. For instance, you might read that technology stocks have lost 10%, but they are likely to represent only a small portion of your entire portfolio.
Review the long-term performance of your investments. Nobody wants to look at their investment portfolio and find the value is lower today than it was yesterday. However, you should invest with a long-term goal. So, rather than comparing the value to last week, look at the performance over years or even decades.

Get in touch to talk about your investment portfolio

If you have any questions about what the current market volatility means for your investments and financial plan, please get in touch. We’re here to help you tune out emotions like fear and focus on how to achieve your long-term goals.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Financial protection: The key options that could protect your lifestyle and family

Financial protection could provide you with a cash boost when you need it most, and there’s more than one type to consider.

Last month, you read why financial protection provides a crucial safety net should you face an unexpected shock. Now, read on to find out more about some of the key options.

2 forms of financial protection that could plug an income gap

Your income suddenly stopping is likely to have an immediate effect on your short-term finances. In addition, it may harm your long-term plans too. For example, you might halt pension contributions or dip into a savings account you’d earmarked for another goal.

If an illness or accident means you can’t work, two types of financial protection could be valuable.

1. Income protection

Income protection would pay you a regular income if you were unable to work due to an accident or illness. The income it provides would continue until you return to work, retire, or the term ends.

So, if you can’t work, it could take a weight off your mind and allow you to focus on recovering.

Usually, income protection would pay a proportion of your usual salary, such as 60%. According to figures published in September 2024 by the Association of British Insurers (ABI), in 2023, more than £177 million was claimed through individual income protection. The average successful claimant received £22,270.

2. Critical illness cover

Critical illness cover would pay out a lump sum if you’re diagnosed with a covered critical illness. This cash injection might allow you to take an extended period off work while remaining financially secure.

The ABI figures show the average person who made a successful critical illness claim in 2023 benefited from a £68,354 lump sum.

You should note that critical illness cover will not pay out for every diagnosis. It’s important to check how comprehensive your cover would be and understand what would be excluded.

You can combine types of financial protection

As income protection and critical illness cover pay out in different circumstances, it may be beneficial to consider whether both options could be right for you.

2 types of financial protection that could support your family if you pass away

Thinking about passing away is difficult, especially if you have dependants. Yet, taking steps to ensure their financial security could make a huge difference in their life should the worst happen.

Here are two types of protection that could improve the financial security of your family.

1. Life insurance

Life insurance would pay out a lump sum to your beneficiaries if you pass away during the term. The money can be used however your beneficiary chooses, such as reducing debt, paying school fees, or covering household bills.

However, according to a Which? report, 39% of parents don’t have life insurance. This oversight could potentially leave your family in a vulnerable position if they rely on your income.

When assessing whether life insurance could be appropriate for your family, you might want to consider how their lifestyle would change if you passed away. For example, if you’re the primary caregiver to young children, would your partner need to reduce their working hours? If so, life insurance may enable them to do so without worrying about money.

On average, ABI figures show life insurance paid out £80,403 in 2023.

2. Family income benefit

If your loved ones may struggle to manage a lump sum or they would prefer a regular income they can rely on, family income benefit might be more suited to your needs.

Rather than a one-off payment, family income benefit would pay out a regular amount for a defined period if you passed away during the term. You might choose for the income to continue for a set number of years or tie it to a milestone, such as when your youngest child turns 18.

You can take out both life insurance and family income benefit

Again, depending on your family’s circumstances, you might choose to take out both life insurance and family income benefit. This combination could provide your loved ones with an immediate cash injection and a long-term income stream.

For instance, you may choose to take out life insurance to pay off debts, such as your mortgage. Then, family income benefit could provide enough to pay for day-to-day expenses until your children reach adulthood.

Get in touch to talk about creating a financial safety net

As part of a wider financial plan, we could help you create a financial safety net that considers your needs and concerns. Please get in touch to arrange a meeting with our team.

Next month, discover what you might consider when calculating the level of cover you need when taking out appropriate financial protection.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

4 reasons to remain calm amid market volatility and uncertainty

Geopolitical tensions have led to a bumpy start to 2025 for investors. If you’re worried about volatility and what it might mean for your long-term finances, there are reasons to remain calm despite the uncertainty.

The ongoing war in Ukraine has resulted in some anxiety in Europe, with the UK and other countries committing to increasing defence spending. In addition, the new Trump administration in the US has imposed several trade tariffs on partners and suggested more will follow.

As a result, many companies and sectors have seen share prices rise and fall more sharply than usual.

Indeed, according to the Guardian, the euro STOXX equity volatility index, which tracks market expectations of short- and long-term volatility, reached a seven-month high at the start of March 2025. The index has almost doubled since mid-December 2024, suggesting investors are feeling nervous.

As an investor, these external factors are likely to have affected the value of your investments over the last few months.

Investment markets don’t like uncertainty

Uncertainty is one of the key factors that contributes to volatility in investment markets.

Unknown policies or other events can make it difficult to understand how a company will perform financially over the long term. This uncertainty can affect the emotions of investors, who may be more likely to make knee-jerk decisions as a result.

Imagine you hold investments in an electronic goods company based in China. In the news, you read the US will impose a 10% tariff on all Chinese goods. As a major export market, this decision by the US could significantly affect the profitability of the company.

After hearing the news, you might worry about your finances and whether you should still invest in the company. If enough investors act on these concerns, it may result in the value of the shares in the company falling.

With so much global uncertainty at the moment, your investments and the wider market could experience more volatility than usual in the coming months.

Level-headed investors could improve investment outcomes over the long term

While it may be difficult, remaining level-headed during times of uncertainty could make financial sense. Here are four reasons to remain calm.

1. Periods of volatility have happened before

When markets are volatile, it may feel unusual or unexpected. However, market volatility is a normal part of investing.

While investment returns cannot be guaranteed, historically, markets have delivered returns over a long-term time frame. Even after downturns, markets have bounced back.

Remembering this could help put your mind at ease and allow you to focus on the bigger picture rather than short-term market movements.

2. Diversified investments could smooth out volatility

Newspaper headlines are designed to grab your attention, and they’re likely to focus on the parts of the market that are experiencing the greatest volatility. For example, you might read that “technology stocks have plunged 10%” or “markets in Japan are booming”.

While these headlines aren’t inaccurate, they don’t tell you the whole story.

In reality, a balanced investment portfolio will typically include investments across a range of assets, sectors and geographical locations.

So, while a fall in technology stocks might affect you, it may not have as large of an effect as you expect if you only read the headlines. Gains or stability in other areas of your investment portfolio could balance out the dip.

3. Market volatility may present an opportunity to buy low

If you’d previously planned to invest a lump sum or you invest regularly, market volatility may cause you to rethink. However, halting your investments might mean you miss an opportunity.

When markets fall, you might have a chance to invest when the price of stocks and shares is lower, allowing you to buy more units for your money. Over the long term, this could lead to better yields.

While investing during a low period could result in higher returns over the long term, you should ensure investments are appropriate. You may want to consider your financial risk profile and wider circumstances when deciding how to invest your money.

4. Trying to time the market can prove costly

Finally, if you’re focused on what the market is doing today, it can become tempting to try and time the market – to buy low and sell high.

However, with so many external factors affecting markets, it’s impossible to consistently time it right. Even professionals, who have a team and resources, don’t always get it right.

Rather than trying to time the market, remaining calm and sticking to your long-term investment strategy is often a better course of action.

Contact us to talk about your investments

If you have any questions about how your investments are performing or would like to review your investment strategy, please get in touch. We’re here to answer your questions and help you feel confident about your financial future.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

5 strategies that could help you avoid running out of money in retirement

Worrying about your finances in retirement could dampen your excitement as you start the next chapter of your life. As you’ll often be responsible for generating your own income once you give up work, it’s not surprising that a February 2025 report from Which? revealed half of over-55s are worried about running out of money.

Indeed, just 27% of those who have retired or are nearing the milestone said they weren’t concerned about draining their pension or other assets in retirement.

Some apprehension about your finances as you retire is normal.

Retirement is likely to represent a significant shift in how you create an income. No longer will you receive a regular wage for your work. Instead, you’ll often start depleting your assets, such as your pension, savings, or investments. As you can’t predict how long your assets need to last, it may be difficult to assess if the income you create is sustainable.

Here are five strategies that could give you confidence in your retirement finances, so you’re able to focus on what’s most important – enjoying this next stage of your life.

1. Consider inflation before you retire

A key obstacle when planning your finances in retirement is that inflation often means your outgoings will increase.

According to the Bank of England, between 2014 and 2024, average annual inflation was 3%. So, an income of £35,000 in 2014 would need to have grown to almost £47,000 to maintain your spending power in 2024.

As a result, if you planned to take a static income throughout retirement, you could face a growing income gap in your later years or deplete assets at a faster rate than you anticipated.

As part of your retirement plan, a cashflow model could help you visualise how your income needs might change, and the effect this would have on the value of your assets. While the outcomes cannot be guaranteed, it could highlight where you might face potential shortfalls and allow you to take steps to improve your long-term financial security.

2. Keep an eye on retirement lifestyle creep

It’s not just inflation that could affect your outgoings. Lifestyle creep, where you spend more on luxuries, could have an effect too.

As you may be in control of how much you withdraw from your pension, it can be easy to slowly increase the amount so you can indulge in an exotic holiday, new car, or regular days out. Over time, these luxuries can become new necessities in your mind and part of your normal budget.

Spending more in retirement isn’t necessarily negative. However, increasing your spending without considering the long-term consequences might mean you face an unexpected shortfall in the future. Regular financial reviews during your retirement could help you keep an eye on lifestyle creep that may be harmful.

3. Assess if investing in retirement is right for you

In the past, it wasn’t uncommon for retirees to take their money out of investments to reduce exposure to market volatility. However, keeping some of your money, including what’s held in your pension, invested might make financial sense for you.

Retirements are getting longer. With the average life expectancy of a 65-year-old now in the 80s for both men and women, you could spend three decades or more in retirement. So, continuing to invest with a long-term time frame during retirement could help grow your wealth and mean you’re at less risk of running out of money.

It’s important to choose investments that are appropriate for you and recognise that investment returns cannot be guaranteed. If you’d like to talk about investing in retirement, please get in touch.

4. Be proactive about retirement tax planning

While you might no longer be working, you’re very likely to still pay Income Tax in retirement. Indeed, according to the Independent, in March 2025, retired baby boomers were paying more Income Tax than working people under 30.

If your total income exceeds the Personal Allowance, which is £12,570 in 2025/26, Income Tax will usually be due. With the full new State Pension providing an income of £11,973 in 2025/26, most retirees will pay some Income Tax even if they’re only taking small sums from their personal pension.

It’s not just Income Tax you might be liable for either. You might need to pay Capital Gains Tax if you sell assets and make a profit or Dividend Tax if you hold shares in dividend-paying companies.

An effective retirement plan could identify ways to reduce your tax bill, so you have more money to spend how you wish and are less likely to run out during your lifetime.

5. Maintain an emergency fund throughout retirement

During your working life, you may have had an emergency fund in case your income stopped or you faced an unexpected expense. In retirement, a financial safety net might still be important.

Having a fund you can fall back on in case you need to pay a large, unforeseen cost, like property repairs, could be essential for keeping your retirement finances on track.

In addition, it may be prudent to contemplate how you’d fund the cost of care if it were needed. According to an August 2024 report from the Joseph Rowntree Foundation, the number of older people unable to perform at least one instrumental activity of daily living without help will increase by 69% between 2015 and 2040.

This rise is partly linked to a growing population of elderly people and rising life expectancies leading to more people relying on informal care, such as family members, or formal care, like a nursing home.

Whether you need to pay for care will depend on a variety of factors, such as the value of your assets and where you live. However, in most cases, you’ll often need to pay for at least a portion of the costs if you require formal care.

So, considering care when you assess your emergency fund could be essential. Knowing you have the savings to pay for care could provide you with peace of mind and mean that should it be required, you have more options to explore, such as choosing a care home with facilities you’d enjoy or one that’s easily accessible for loved ones.

Get in touch to discuss your retirement finances

As your financial planner, we could work with you to build a retirement plan that reflects your circumstances and goals. Whether you’re worried about running out of money or you have other concerns, we’re here to listen and discuss your options. Please get in touch to arrange a meeting.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate cashflow planning.

4 tricks that could help you curb potentially harmful impulses

Everyone has made an impulsive financial decision that they end up regretting later. While these hasty decisions might feel right when you initially make them, they have the potential to harm your long-term finances.

Some impulsive decisions might have little effect on your overall financial wellbeing. For example, picking up a treat when you’re grocery shopping or spending a little more than you should when you’re browsing your favourite online shop.

However, there are times when making a quick decision has the potential to affect your long-term financial security. This might include when you’re deciding how to invest your money, withdraw a lump sum from your pension, or deplete your emergency fund.

So, using tricks to curb your impulsive decisions, including these four, could be useful.

1. Recognise when you’re more likely to make impulsive decisions

There are times or situations that mean you’re more likely to make impulsive decisions. For instance, common triggers for making rash financial decisions might include:

When you’re experiencing emotional highs or lows
Limited-time offers that give a sense of urgency
If you’re facing social pressure.

Usually, you might take the time to carefully evaluate an investment decision to understand how it could fit into your wider goals. However, if you’re approached by a group of friends who are excitedly chatting about an opportunity that you “must” buy before it’s too late, you could be tempted to throw caution to the wind.

Simply understanding which scenarios are more likely to lead to you making an impulsive decision is a good place to start. In means you’re in a better position to take note when you could benefit from taking a step back, expert advice, or more research.

2. Implement a cooling-off period

An impulse purchase can seem exciting at first. Yet, a day later, the high it gave you may have worn off and it might be replaced by feelings of regret. So, implementing a cooling-off period could help you reduce the effect emotions have on your financial decisions.

Using different time frames depending on the importance of the decision may be useful.

For a smaller purchase, you might benefit from simply sleeping on the decision. If you still want the item or experience the following day once the initial emotions have passed, it might be worth it.

For larger financial decisions, give yourself several weeks or even longer.

If you’re thinking about investing more money, taking out a loan, or adjusting your financial plan, this longer period could give you the time to fully research your options and weigh up the pros and cons.

Should you decide to go ahead with your initial impulse, you can feel more confident if you’ve explored the other options and fully understand the potential implications.

3. Consider your long-term plan when making decisions

When you’re managing your finances, it’s important to remember the decisions you make today could affect your options in the future.

Having a clear long-term plan that you’re working towards could help you balance short- and long-term goals. For instance, you might enjoy treating yourself to a fancy meal out each week and feel that it’s a worthy expense. But would you still feel the same if it could place your plans for an early retirement at risk?

It’s not just about how you spend money either. You might be tempted to increase the amount of investment risk you take in the hope of achieving higher returns. Yet, taking more risk than is appropriate for you might mean you have a greater chance of losing your money.

So, next time you’re about to make an impulsive financial decision, ask yourself: does this align with my long-term goals?

4. Work with a financial planner

Working with a professional who understands your circumstances and goals could help keep you on track. There are several important reasons why.

First, by setting out a financial plan with your aspirations at the centre, you’re more likely to be aware of how impulsive decisions could place your goals at risk. In some cases, that could be enough to curb your impulsiveness.

Second, being able to turn to someone you trust when you need a second opinion could be invaluable. Talking about your ideas and discussing alternatives may be useful when you’re assessing which options are right for you in the short and long term.

Finally, regular financial reviews might mean you’re less likely to make large impulsive decisions as you know you have a scheduled time to discuss and think about your finances. If you’d like to talk about how we could work with you or you’d like to review your financial plan, please get in touch.

Please note: Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Investment market update: February 2025

After reading headlines throughout February, you might be expecting a gloomy investment outlook. Yet, despite threats of trade wars and uncertainty around the world, there were market highs. Read on to find out more about some of the factors that influenced investment markets.

As investment markets are experiencing volatility, it’s perhaps unsurprising that some investors sought the “safe haven” of gold. On 10 February, the price of gold hit a record high of $2,900 (£2,288) an ounce.

While you might be tempted to follow suit and change your investment strategy, remember to focus on long-term performance. While returns cannot be guaranteed, volatility is part of investing and, historically, markets have delivered returns over long-term time frames.

UK

The Bank of England (BoE) started the month by cutting the base interest rate from 4.75% to 4.5%, which may provide some relief to borrowers. However, higher than expected inflation could mean the Bank is less likely to make a further cut in March.

Office for National Statistics (ONS) data shows UK inflation was 3% in the 12 months to January 2025 – an increase of 0.5% when compared to a month earlier.

Additional data from the ONS was a mixed bag.

The chancellor will no doubt welcome news that the UK returned to growth in the final quarter of 2024 after the economy grew by 0.1% between October and December. However, GDP per head fell for the second quarter running and the manufacturing sector shrank for the fifth consecutive quarter.

The BoE also slashed its growth forecast. It halved its prediction made in November 2024, and now expects GDP to increase by just 0.75% in 2025.

In addition, a report from S&P suggests businesses are shedding jobs at the fastest pace in the last 15 years (excluding the pandemic). The trend was linked to higher payroll costs following increases to minimum wage and employer National Insurance contributions unveiled in the Autumn Budget.

Markets in the UK were rocky at the start of February. On 3 February, the FTSE 100 fell 1.25% when markets opened following talks of trade tariffs from the US and almost every share on the index was down.

Yet, just days later, on 6 February, the FTSE 100 hit a new closing high on the back of the BoE cutting interest rates. Then, on 10 February, the index hit another high, this time led by BP, which saw a 7% increase after activist investor Elliott Investment Management took a stake in the company.

Amid growing geopolitical tensions, on 25 February, prime minister Keir Starmer announced the government will increase defence spending to 2.5% of GDP by 2027. The news led to UK defence stocks rising, including BAE Systems, which lifted 4.2%.

Europe

Official figures from Eurostat show the eurozone narrowly avoided stagnation at the end of 2024 after posting growth of 0.1% in the final quarter. Growth varied across the bloc, both France and Germany contracted, while Spain grew 0.8%.

Figures from S&P Global’s Purchasing Managers’ Index (PMI) indicate the eurozone may have turned a corner. Indeed, the output index was above 50, which indicates growth, for the first time since August 2024. Spain was the main growth engine, but Germany, the largest economy in the bloc, posted its best monthly performance since May 2024.

Goldman Sachs warned the eurozone faced a “sizeable” hit from trade tensions.

Indeed, tariff threats are already affecting the business decisions of some companies. Beauty firm Estee Lauder announced plans to cut 7,000 jobs as it significantly expanded its restructuring programme to allow it to manage “external volatility, such as potential tariff increases globally”.

Similar to the UK, European markets opened in the red on 3 February. Germany’s Dax (-2%), France’s CAC 40 (-1.9%), Spain’s IBEX (-1.7%) and Italy’s FTSE MIB (-1.4%) were all affected by investor anxiety about the effect tariffs will have.

Again, the market didn’t experience a downturn for long.

European shares hit a record high on 12 February. The pan-European Stoxx 600 increased by 0.2% led by Amsterdam-based brewer Heineken, which saw a 12% jump after it revealed better than expected profits.

Following the US side-lining Ukraine during peace talks with Russia, investors anticipated a rise in military spending. On 17 February, more than €18 billion (£14.9 billion) was added to the value of European defensive stocks.

US

The headline figure for inflation was 3% in the 12 months to January 2025 after a slight increase when compared to a month earlier. The data may mean the Federal Reserve holds off cutting interest rates in the coming months.

Since taking office in January, President Donald Trump has implemented several trade tariffs and made threats to impose more. Trump has said tariffs will protect the US economy, but early signs might indicate it’s backfired.

The US trade deficit widened by around $19.5 billion (£15.3 billion) to $98.4 billion (£77.5 billion) as imports increased at the end of 2024. The jump may be driven by US companies trying to beat potential tariffs by shipping goods in larger quantities.

In contrast to initial speculation suggesting the Trump administration would boost US businesses, JP Morgan analysts said it was now leaning towards a “business unfriendly stance” due to tariffs.

Trump has also spoken about plans to cut immigration and deport those who are not authorised to live in the US. Global investment bank Goldman Sachs has warned these policies could harm economic growth. Indeed, the bank said in a baseline scenario, lowering immigration would result in losing 0.1% of GDP every quarter.

The report also noted that deportation could severely disrupt some industries. In the US, unauthorised immigrants account for around 4–5% of the workforce, but in some sectors, it is as high as 15–20%. The bank added losing these workers may lead to higher inflation.

The market volatility experienced in Europe on 3 February, affected the US too. Indeed, the Dow Jones – an index of 30 prominent companies listed on stock exchanges in the US – was down 1.26% at the start of trading. The broader S&P 500 index also fell by more than 1.6%.

After an initial post-election bounce, Elon Musk’s Tesla saw stocks tumble by 1.5% on 25 February after data showed European sales were plunging.

Asia

Markets in Asia started poorly in September as concerns about sweeping tariffs from the US weighed on exports across the region. Indeed, on 3 February, Japanese and South Korean automakers saw dips, including Honda, which fell by around 7%, and Toyota and Nissan, both of which slipped by more than 5%.

When China’s market reopened on 5 February following Lunar New Year celebrations, the CSI 300 index fell by 0.6% on opening.

The threat of tariffs is expected to affect economic performance too.

South Korean think tank Korea Development Institute now projects the country will grow by 1.6% in 2025 – 0.4 percentage points lower than it estimated in November 2024. The organisation said the lower pace of growth was due to a “deterioration of the trade environment”.

However, it wasn’t all negative.

In fact, Chinese technology stocks continued to perform well after receiving a boost in January following the launch of the AI app DeepSeek. The Hang Seng TECH index in Hong Kong was up 2.7% on 12 February and had increased by around 25% in the month to mid-February.

Among the companies that benefited from the boost was internet giant Alibaba and carmaker BYD, which boasted gains of 25% and 30% respectively for the month to mid-February.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Thinking about investing in crypto? You need to be aware of these signs of a scam

As some cryptocurrencies have delivered large returns in the past, you may be more likely to overlook red flags when you’re assessing an investment opportunity. Yet falling victim to a scam could leave you out of pocket and affect your mental wellbeing, so being aware of the warning signs could be essential.

According to the City of London Police, more than £612 million was lost to investment fraud in 2023, and many scammers are using the growing interest in cryptocurrency to entice victims.

Indeed, the figures show cryptocurrency accounts for more than 40% of all investment scam reports and was the most common commodity that victims believed they were buying.

The money lost through crypto scams can be substantial.

In a prosecution brought by the Financial Conduct Authority (FCA), two individuals were convicted in November 2024 of defrauding 65 investors out of more than £1.5 million – the equivalent of around £23,700 for each victim. The duo used cold-calling to establish contact with victims and then directed them to a professional-looking website that claimed to offer high returns in crypto.

Smaller upfront investments could be used to entice crypto scam victims

The City of London Police report suggests one of the reasons why crypto scams are growing is that fraudsters ask for a smaller upfront investment to “prove” the opportunity is legitimate. This could give targets a false sense that the investment is low risk and offer a sense of security.

There are other reasons why even savvy investors might be more likely to fall for a crypto scam too, including:

Crypto is still a relatively new asset, and many people don’t fully understand what the term means. According to a 2023 report from the Financial Services Compensation Scheme (FSCS), while 91% of consumers had heard of cryptocurrencies, only 11% said they had a good understanding of how they worked. Scammers may use this lack of knowledge to gain the trust of victims.
Some crypto assets have delivered large returns, which may make bold claims by scammers seem reasonable. For example, figures published by Morgan Stanley in October 2024 suggest Bitcoin’s average annual return between 2014 and 2024 was 49%. However, it’s important to note that investment returns can’t be guaranteed and the value of crypto assets is often volatile.
A 2024 survey from the FCA found that 38% of participants had seen or heard an advert about cryptoassets, up from 27% in 2020. Social media was the most common place people remember seeing a crypto advert and it could give the false impression that everyone else is investing in crypto. For some, this view might mean they’re more willing to listen to a scammer if they’re targeted.

So, with crypto scams on the rise, if it’s an asset you’re interested in learning more about, it’s crucial you take steps to protect your wealth.

How to protect your wealth from crypto scams

Be wary of adverts promising high returns

While potential high returns can be tempting, if you spot an advert or social media post promising significant returns, be cautious. Ask yourself if the claims sound realistic.

It’s also important to note that investment returns cannot be guaranteed. So, if an advert states there is no risk of you losing your money, it should set alarm bells ringing.

As the old saying goes, “If it seems too good to be true, it probably is.”

Treat cold-calls with suspicion

If you’re contacted out of the blue about an investment opportunity, treat the communication with suspicion. This is a common tactic that scammers use to establish a relationship and gather information about you.

It’s not just calls or messages to your phone you need to be cautious of. Scammers might also email or message you on social media.

Don’t rush into investment decisions

If you see an investment opportunity that you think could boost your wealth, it can be exciting. However, it’s important not to rush into a decision. Instead, take a step back and do your research.

Fraudsters will often pressure you to make a decision quickly, so you don’t have time to think. They might say offers are for a limited time or there are only a few opportunities to invest, so you need to beat other people to it.

Scammers might try to use the volatility of the crypto market to apply further pressure. For instance, they may say the value of the asset is rapidly climbing, so you need to make a decision right away or miss out on the opportunity for good.

Legitimate financial professionals will understand the importance of considering investments, and won’t pressure you to commit on the spot.

Research the firm

It’s not just the investment you should research either, but the person or firm you’d be working with.

Scammers will often go to great lengths to convince you they are a genuine professional. So, don’t take a glossy website or glowing reviews at face value, dig a bit deeper.

The Financial Services Register allows you to check if individuals or firms are authorised by the FCA.

Some criminals will pose as a legitimate firm to gain your trust. So, use the contact details on the Financial Services Register to check the person you’re speaking to is genuine and confirm the information you have.

Don’t be afraid to seek advice

You don’t have to review an opportunity on your own. Sometimes, speaking to a trusted loved one or independent financial planner could help you identify potential red flags you’ve overlooked.

Even genuine crypto investment opportunities can be high risk and might not be right for you. So, speaking to a professional could help you understand how it might fit into your wider financial plan and provide a chance to review the alternatives.

If you’d like to talk to one of our team about your finances and the steps you might take to reach your long-term goals, please get in touch.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Crypto assets are not regulated financial products so please be aware that trading them carries a considerable amount of risk for your capital. Cryptocurrencies are also not covered by existing consumer protection laws.

How to reduce your Capital Gains Tax bill in 2025

A combination of rising rates and panic ahead of the current government’s first Autumn Budget has led to HRMC collecting a record amount in Capital Gains Tax (CGT) towards the end of 2024.

According to a report in the Telegraph, between July and November 2024, CGT generated more than £1 billion for the government – more than a £200 million increase when compared to the same period in 2023.

The rise in CGT has been associated with uncertainty in the lead-up to the government’s Autumn Budget. Speculation that tax rates would rise sharply, and tax breaks would be cut, led to some investors, who worried they might face a much larger tax bill if they delayed decisions, selling assets.

As CGT is a tax that’s paid on the profit you make when selling certain assets, this panic increased the amount of CGT collected.

While the Labour government did unveil changes to CGT during the Autumn Budget, including a rise in tax rates, they weren’t as drastic as some investors feared. Following the Budget on 30 October 2024:

The basic rate of CGT increased from 10% to 18%.
The higher rate of CGT increased from 20% to 24%.

The increase could mean the amount of CGT collectively paid continues to rise. Indeed, according to the Office for Budget Responsibility, the changes could increase CGT revenue by around £1 billion by 2029/30. However, it also assigned the figure a “high” uncertainty rating as it can be difficult to judge behavioural responses.

If you could face a CGT bill in the future, read on to discover some practical steps you might take to reduce your liability.

1. Consider your overall tax position

Rather than looking at your CGT liability in isolation, reviewing it alongside your overall tax position and wider financial plan could be useful.

For example, if you’re a basic-rate taxpayer and the profits you make when selling an asset are below the higher-rate Income Tax threshold (£50,271 in 2024/25) when added to your other income, you could pay the lower CGT rate. So, if your other sources of income are flexible, you might wait to sell assets until you’d potentially benefit from the basic rate of CGT.

If you plan to delay selling assets, keep in mind the value of them could change.

2. Use your Capital Gains Tax exemption

Each tax year, you can make a certain amount of profit before CGT is due. This is known as the “Annual Exempt Amount”.

In 2024/25, the Annual Exempt Amount is £3,000 for individuals. Crucially, you cannot carry this exemption forward into a new tax year if you don’t use it.

Spreading asset disposals across multiple tax years to use the Annual Exempt Amount could help you reduce your overall tax bill.

3. Use tax-efficient wrappers when investing

If you could face a CGT bill when you sell investments, you might want to consider using tax-efficient wrappers, such as ISAs and pensions.

In 2024/25, you can deposit up to £20,000 into ISAs. If you choose to invest in a Stocks and Shares ISA, the returns you make won’t be liable for CGT.

If you’re investing for the long term, a pension could also be suitable. Again, returns from investments held in a pension are not liable for CGT. In 2024/25, you can usually add up to £60,000 (your “Annual Allowance”) to your pension before you could face additional tax charges.

However, the amount you can tax-efficiently add to a pension could be as low as £10,000 if you’ve already taken a flexible income from your pension or if your adjusted income is more than £260,000 a year. If you’d like to understand your pension Annual Allowance, please get in touch.

Remember, you cannot normally access the money held in a pension until you’re 55 (rising to 57 in 2028). So, it’s important to weigh up your reason for investing and your wider financial circumstances before you increase pension contributions.

4. Pass assets to your spouse or civil partner

You can usually transfer ownership of assets to your spouse or civil partner without facing a tax bill. As many tax allowances and exemptions are individual, passing assets to your partner could be useful.

For instance, if you’ve already used your Annual Exempt Amount in the current tax year, you might transfer ownership of an asset to your partner before you dispose of it to use theirs. You might also do this if your partner would benefit from the lower CGT rate.

5. Offset your losses

Making a loss when selling assets can be disappointing, but it could be used to reduce a CGT bill.

You can often offset losses against the gains you’ve made, which may lead to a lower CGT bill and potentially mean you pay the lower CGT rate. In some cases, you may also carry losses forward to offset future profits.

If you plan to offset losses against your gains, it’s important to keep accurate records. You will also need to register losses with HMRC by completing a tax return.

6. Work with a financial planner

Making your CGT liability part of your wider financial plan could help you identify steps you might take to reduce a potential bill in a way that aligns with your long-term goals. Please contact us to arrange a meeting and discover how we may work together.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.